Trowers & Hamlins

Sign up

Home » Resources » Blog » New Exemptions in the Draft Procurement Regulations

New Exemptions in the Draft Procurement Regulations
Trowers Public Insight

New Exemptions in the Draft Procurement Regulations

The Government has recently published Draft Regulations to replace the Public Contracts Regulations 2006. The Draft Regulations implement the new procurement Directive (2014/24/EU) and are due to come into force in the spring of 2015.

One of the key features of the Directive, and therefore of the Draft Regulations, is the codification of various case law exemptions to the procurement regime. These are in addition to the general exemptions which are being carried over from the existing Regulations.

General Exemptions

As previously, there is a threshold value below which the procurement regime will not apply.

  Supplies Services
Central Government Authorities £111,676 £4,322,012
Other Public Sector Authorities £172,514 £4,322,012


Note that the distinction between Part A and Part B services is being removed in the new directives. Therefore these thresholds mark where the Regulations apply to contracts for all services apart from "public service contracts" which are expressly set out in Schedule 3 of the directives.

Part 2, sub-section 3 of the Draft Regulations set out express exemptions for certain types of contract including those for, communication networks/services, certain legal services, certain financial services, loans and the acquisition or rental of land as well as employment contracts.

Case Law Exemptions

The Draft Regulations codify the Teckal and Hamburg Waste exemptions in Regulation 12.

Teckal: The Regulations will not apply to contracts awarded to an in-house company established predominantly to provide services to the authority. The "Teckal company" must satisfy the following conditions:

  • The Contracting Authority must exercise a "control" over Teckal Co similar to that which it exercises over its own departments
  • More than 80% of the activities of the Teckal Co must be for the Contracting Authority
  • No direct private capital participation in the Teckal Company (unless permitted by legislation)

The codification of the Teckal exemption in Draft Regulation 12 also allows a variety of structures involving multiple Contracting Authorities and/or multiple Teckal Companies. This gives both clarity and flexibility to possible public sector delivery structures.

Hamburg Waste: The Regulations will not apply to contracts awarded between Contracting Authorities where the following conditions are met:

  • The contact must implement cooperation between Contracting Authorities to ensure public services are provided in pursuit of common objectives
  • The contract must be governed solely by considerations relating to the public interest
  • No more than 20% of the cooperative activities can be performed on the open market

Although these exemptions are now codified in the Directive and Draft Regulatations, case law will remain important for interpretation. For Teckal structures, concepts such as "control" have been examined by the courts and the courts' findings will still be helpful points of reference. For Hamburg Waste arrangements, successive cases have emphasised the importance of collaboration and common public service objectives. We expect these to remain central to any assessment of this new exemption.

Our procurement experts have produced a users' guide to the new procurement rules to guide you through the changes. If you would like a copy please contact

Trowers & Hamlins advises its clients on efficient procurement structures and innovative service delivery models. For more information or to arrange training please contact James Hawkins, Helen Randall or Amardeep Gill.